freecreditreport.com not worth the jingle

douchebag[1]If you’ve been following along my various blogs, you’ll know since moving to the US I’ve been totally focussed on getting my credit rating in shape. Despite showing up with a letter of referral from my UK bank in 2006 that I’d been a total rockstar managing the mortgage on a $1.2 million dollar home loan, I couldn’t get so much as a contract cellphone.

Credit ratings are everything. I didn’t have one. So I’ve tackled this over the past 7-years like a religious zealot. Monitoring it, bumping my rating up to 771/748/771 on my 3-Bureau report. Feeling good, Oh happy days I’m in the 10%. As part of that effort I paid off my mortgage, managed payments, used cards I didn’t didn’t need, and only once missed a payment and that was due to a processing error in what was supposed to be the set-up for an automated payment system by my FCU Amplify here in Austin.

Still, no matter. Turns out I’m considering another investment opportunity, and I got a call from Amplify about a Home Equity loan, or Line of Credit. I agreed, applied and sent in all the usual documents. I heard back today the interest rate was going to be almost 1.5% higher than we’d discussed, due to my credit rating being only “674”. How could that be I asked, and then pulled my 3-bureau score and sent it along.

Turns out that Amplify uses Equifax. When Equifax is asked for a commercial rating, it doesn’t use the one it gives your potential lenders, it uses something called the PLUS Score. Turns out this really isn’t the same score, and in my case it’s a whole 60 points off the real score. Seriously. It’s right here on the freecreditreport.com website. Right there it says “Your PLUS Score is a numerical representation of your credit risk on a scale very similar to those used by lenders.” Similar, not worth the calculation they did to make it up is more like it. Experian themselves use the same bogus PLUS Score. It doesn’t matter which of these services you sign up for, the result won’t be what they report to a lender. You have been warned.

Turns out, that most of the three credit score agencies do the same, yes Experian, Equifax and TransUnion all only provide fake credit ratings when you sign up for their online services. Is it any wonder why people spend so much time and effort gaming the system?

If you ended up here looking for help, I can’t. Robert Palmer has a great video on this.

Money too tight to mention, credit no longer matters

I’ve finally had a financial epiphany. Since the summer of 2004 I’ve been totally focused on getting a perfect credit rating after I got turned down by AT&T for a lousy monthly cellphone contract as I had a -3 credit rating, despite owning a big house back in the UK and having a near perfect credit rating there.

Anyone that reads my rambling will know that until recently I was still anal retentive about this. Especially since I paid off my mortgage and much to my horror, my credit rating dropped. It dropped last month as well and is down from a high of 780, to 764. 764 is still in the top 5% but I was really hoping this would be one way I could make the top 1%.

The epiphany? Well, actually, just like I don’t much need AT&T anymore, I don’t need a credit rating. While there are a few things a credit check remains important for, the rating itself no longer matters, hopefully for me it will stay that way.

Edit to the credit

Some of you know I’ve been on a crusade to get the best credit score I could after arriving here in the US and getting refused a cellphone because I had a -3 rating, ie not-known, does not exist. Over 4-years I managed to get my credit rating to 730, and over the last 2-years I managed to get it up to 781.

One thing they tell you in all the credit score get rich quick schemes is that your credit score isn’t a measure of how much money you have, it’s the ration of debt to credit and your ability to pay. So paying off your mortgage, you’d think, would be a big ticket item in the rating, but apprently not the one I expected.

I paid off my mortgage last month, and this month saw the first report that included, or rather didn’t list my real estate debt. Guess what? My credit rating went down 10 points, to 771.

I guess it’s understandable, but it shows a massive flaw in the credit rating system. They don’t know how much I earn, they also don’t know why I no longer have real estate debt. So from that basis, I could be broke and homeless, just not using credit. By the end of the year I may make that illusive 800 mark, I have two hard inquiries on my record which will both age out after late Sept./Oct.